Creditors Cutting Federal Workers Financial Breaks

January 05, 1996|By RICHARD STRADLING Daily Press

Furloughed government workers aren't earning any money, but they're still a good credit risk.

Banks and mortgage companies are finding all sorts of ways to help furloughed workers financially weather the shutdown. They are extending special lines of credit, deferring loan payments and promising not to report overdue payments to credit agencies.

``What we urging them to do is come in and talk one-on-one with us,'' said Tony Mattera, spokesman for Crestar Bank in Richmond. ``We don't have a generic program for federal employees, but we are able to do some things for them that will help them through the situation.''

These could include delaying mortgage payments, Mattera said, or waiving the early withdrawal fees so federal employees can have access to their Certificates of Deposit. More than 750,000 federal workers have either been furloughed or are working without pay during the partial shutdown. The largest groupin Hampton Roads is 4,500 civil servants and contractors at the NASA Langley Research Center in Hampton.

The Langley Federal Credit Union automatically put off collecting loan payments from furloughed workers, said President Jean Yokum. The credit union has also offered special lines of credit, often so federal employees can pay mortgages at other institutions, Yokum said.

``We're helping them any way that we can,'' she said.

Underlying this willingness to help is the understanding that federal workers will one day go back to work and will probably receive back pay when they do. First Virginia Bank of Tidewater will work with furloughed federal employees ``like we do with any of our customers who have temporary financial problems but who are not financially unsound,'' said Chairman and Chief Executive Officer James Babcock.

In announcing several measures to help tide federal workers over during the shutdown, NationsBank President Ken Lewis said they were the same types of breaks the bank offers to victims of natural disasters.

``Fortunately, in this case, we know that the situation is temporary, and workers' incomes will resume, making their needs short-term,'' Lewis said in a statement released Wednesday.

If banks weren't inclined to help federal workers on their own, they're getting lots of encouragement. The American Bankers Association sent letters to its members Thursday urging them to help ``customers who are faced with short-term cash-flow problems as a result of the federal shutdown.''

And the two big government-sponsored mortgage providers, Fannie Mae and Freddie Mac, have urged the banks and mortgage companies handling their loans to give furloughed workers a break on payments. The last time Fannie Mae took such steps was following Hurricane Opal in Florida last summer, said spokeswoman Carol Blymire.

Another source of financial help for federal workers is the nonprofit Federal Employees Education and Assistance Fund. The fund is making $500 interest-free loans to workers, though the heavy demand for assistance during the shutdown is draining its resources, and administrators warned that their $100,000 reserve could run out next week.

Typically, the fund lends about $20,000 a month to federal workers caught in a financial crisis - about $1 million in all since its founding 10 years ago. Recently, however, applications for help are running at $12,000 a day.

The fund gets most of its money through voluntary contributions from federal workers, though anyone can make a tax-deductible donation. Both of Virginia's senators - Democrat Charles Robb and Republican John Warner - announced that they will give part or all of their legislative pay to the fund during the shutdown.

Workers can contact the fund at 1-800-323-4140. Applications can also be picked up at Robb's Norfolk office in Dominion Tower, Suite 107, at 999 Waterside Drive. The phone number for Robb's office is 441-3124.

* Staff writer Bob Kemper contributed to this report.

FINANCIAL ADVICE

* Banks and mortgage companies say they are eager to help federal employees who have been furloughed or are working without pay. Everyone's case is different, but the advice repeated everywhere is the same. Instead of letting bills simply go unpaid, workers should call their banks and creditors ahead of time to work out individual solutions to their financial problems.